Romano PRODI: “I did not make the statement attributed to me”

I did not make the statement attributed to me. Our position on this issue is clear. The European Union welcomes Ukraine’s European choice. Ukraine is a strategic partner of the EU, and, as a result of the EU’s enlargement, a direct neighbor. We are working jointly to strengthen further our relationship in the framework of the European Neighborhood Policy. This policy is a response to enlargement, but it is not about enlargement. This is a policy distinct from the issue of further accessions — an issue which is not on the agenda today.

What were the main points you discussed on May 18 at the meeting with Prime Minister of Ukraine? Could you, please, outline the most outstanding issues which are now on the table in the framework of Ukraine-EU relations?

Prime Minister Yanukovych came to Brussels for the annual meeting of the EU-Ukraine Cooperation Council. We also met bilaterally at the Commission. This was excellent occasion for reviewing the state of our bilateral relationship, for exchanging views on developments on either side, and for discussion of a number of pending international issues. Obviously, the current state of work on the ENP, and our expectation to finalise the ENP Action Plan in the near future were high on the agenda.

How could you evaluate the prospects of Ukraine-EU Action Plan? When will the drafting of this document be finished? In what does the specificity of this document consists and what exactly differs this particular Action Plan from other Action Plans which are elaborated with other neighbor countries? Why does the EU rule out the idea to shift the relations with Ukraine towards the association level?

Following three rounds of consultations with Ukraine, a next round of consultations will take place in Kyiv on 2 June. On 12 May, the Commission has put forward its European Neighborhood Strategy Paper, accompanied by a set of country reports, including one on Ukraine. This strategy paper is now being discussed with Member States, and will be discussed by the General Affairs and External Relations Council on 14 June. We propose to finalise our consultations with Ukraine immediately after that discussion, i.e. on 15 June, i.e. before the 8 July EU — Ukraine summit in The Hague. Final endorsement by the Council on the EU side will follow later.

The specificity of the Action Plan with Ukraine reflects the state of implementation of the PCA with Ukraine, the overall level of our co-operation, the internal situation in Ukraine, and Ukraine’s specific concerns. For example, issues that are expected to figure prominently in the envisaged Action Plan are the democratic conduct of presidential elections in Ukraine, the review of the feasibility of the establishment of a Free Trade Area following Ukraine’s accession to the WTO, the establishment of a constructive dialogue on visa facilitation between the EU and Ukraine, and ensuring compliance with internationally accepted nuclear safety standards in completing and starting-up of the ‘K2R4’ nuclear reactors.

The question of a possible new level of contractual relationship is one that will have to be dealt with at the appropriate time, taking into account further progress on PCA implementation as well as on implementing the Wider Europe Action Plan. We are not in a position to commit to a roadmap towards an Association Agreement.

The representatives of Ukraine quite a number of times stated about Ukraine’s readiness to be granted full market economy status. According to Ukrainian officials for the time being there are no any substantial reasons to reject such a step. What is the position of the European Commission on this regard? Maybe there are some political reasons for this persistence from the EU side?

Ukraine is currently classified as an economy in transition by the European Commission for the purposes of trade defense investigations (anti-dumping). Specific technical criteria must be met in order for graduation to Market Economy Status. It is not a political issue. The EC has looked very carefully at the Ukrainian case and issued a detailed assessment, which recognizes that there has been good progress in advancing towards market economic conditions. For the purposes of anti-dumping we still have two areas of specific concern. The first is undue state interference in the setting of prices, which is not in accordance with market economy criteria. We have seen this recently in particular in relation to the metals sector. Secondly, there appear to be some aspects of the legal framework and its implementation on bankruptcy that could cause particular difficulties for trade defense investigations. We have assured the Ukrainian government that once it has taken the necessary action to correct these problems, Ukraine will be granted Market Economy Status. More generally, we continue to encourage Ukraine in its efforts to make progress on structural economic reforms on issues such as taxation, VAT exemptions and reimbursements, coal sector restructuring and large scale privatisation, but we do not consider these to be a hindrance to Ukraine’s request for MES.

What steps is the EU ready to undertake to avoid the negative impact of the enlargement which Ukraine is pointing out?

We have been working very hard and closely with the Ukrainian Government in the run up to the enlargement of the European Union on 1 May to ensure that Ukraine is able to benefit from becoming a direct neighbor of the European Union. As neighbours we have a common interest in ensuring that the new external border of the EU is not a barrier to trade, social and cultural interchange We were pleased to reach agreement on extending the EU-Ukraine Partnership and Cooperation Agreement to cover all 25 EU Member States.

The EU after enlargement is now Ukraine’s largest trading partner. The overall dynamic potential of trading with the world’s biggest single market is considerable for Ukraine and will offset any short term losses. However, we have tackled practical problems raised like the need to conduct reviews of trade defense measures where the underlying conditions may have changed due to enlargement so that exporters do not suffer undue “enlargement shock.” The only outstanding practical issue is related to trade in steel, where we are hoping to be able to conclude a new steel agreement later this month based on Ukraine’s traditional trade flows with the acceding countries, but where Ukraine’s application of an export duty on scrap metal continues to be a problem. We would like a firm commitment that the export duty which hinders free trade in scrap will be gradually eliminated.

We are also aware of Ukraine’s concerns on the movement of people between Ukraine and the new EU member states. We need an adequate and efficient border management on both sides. On this condition, the Schengen system contains sufficient flexibility to permit the legal travelling of citizens from both sides of the border without unnecessary administrative hurdles. The EU remains ready to continue a dialogue with the Ukrainian authorities on visa and other issues in order to enhance understanding and exploitation of existing potential. We should work together to ensure that Ukrainian citizens who wish to cross borders are not hampered by unnecessary administrative obstacles. For example, the proposal on local border traffic that the Commission has put forward some time ago, if adopted, would facilitate cross-border movement for Ukrainian nationals living in the border areas who have legitimate and valid grounds for regularly crossing the border.

How does the EU evaluate the influence of forthcoming presidential elections in Ukraine on the European integration prospects of our country?

We are observing the election campaign with considerable interest. I am pleased to see that the strongest candidates are also the most pro-European which, I hope, tells us something about popular support for integration with the EU.

For the EU, the conduct of the elections will in turn be an important signal of Ukraine’s commitment to European values. Respect for shared values is a key element underlying EU-Ukraine relations. By conducting the elections in a democratic fashion, in line with European values, Ukraine can demonstrate that it truly does subscribe to these values.

Does the EU have a clear vision and relations’ strategy towards the countries of our region and Ukraine in particular? Is the EU going to proceed with its policy towards the region by focusing it on the relations with Russia, developing the contacts with other countries on the basis of residual principle?

The European Neigborhood Policy is addressed to the EU’s existing neighbors and to those that have drawn closer to the EU as a result of enlargement. This applies to Russia, Ukraine, Belarus and Moldova. However, the EU and Russia have decided to develop their strategic partnership through the creation of a different instrument, the so called “four common spaces” as defined at the 2003 St. Petersburg summit.

Our neighbors are very different one from the other. They are in different situations, they have different historical relationships with the EU, and varying degrees of will and capacity to implement reforms needed for drawing closer to the Union. Action Plans will therefore be tailor-made. How far and how fast we can go together will depend on how much we share: political values, economic systems etc. With Ukraine we share the greater part of these values.

Cf. the recent Commission Communication on relations with Russia, COM(2004)106, 9 February 2004, as well as the Council Conclusions of 24 February 2004.